John Sekevitch, President at CyberSolutions.io, joins me, Jen Spencer to discuss the channel from the point of view of the partner, conflict between direct and indirect sales, making your partners money, customer experience ownership and more on this episode of The Allbound Podcast.
Typically on the podcast, I’m interviewing channel executives who represent a vendor and they’re talking about their best practices, and their triumphs and challenges in engaging a channel of partners to help them achieve their revenue goals. What’s so great is you bring the perspective of the channel partner, which is a really powerful voice that many of our listeners need to hear.
You’ve held executive leadership positions over the last 20 years at companies like IBM, and Net SPI. You’ve also worked directly in sales and marketing; so you have a vast amount of business experience, and so I imagine you understand what works and what doesn’t when it comes to channel, but also really business in general. Channel is just one aspect of an entire business. What are some of the biggest changes that you’ve seen in channel sales and marketing?
The biggest change I’ve seen is more and more companies starting with the channel, rather than starting with their own direct sales organization. I think that’s just symptomatic of what’s happening out in the marketplace; it’s very difficult to sell direct these days without spending a lot of money on marketing. In my experience everybody’s kind of focused on a handful of executives, and those executives don’t answer their phone and they don’t respond to emails. They get their insights from their relationships; their trusted relationships.
Hiring a sales guy just because they have the ability to sell isn’t enough anymore. What you’re looking for is potentially working with a channel partner who already has those trusted relationships. In the cyber security space for instance, there’s a company called Opto, and Opto has relationships with most of the top banks and financial services, organizations and large retailers. So as a result, everybody wants to get their attention so that their products are being represented. What’s interesting is that now the channel partner is in power, because of the fact that they have these relationships, and they can try to exact a pound of flesh out of the product or offering provider.
You’ll see things like big commission payouts for the direct side being in the 5% to 10% range, and on the channel side being in the 20% to 25% range, regardless of whether or not they’re selling at this price or not. I’m seeing companies starting with the channel rather than direct, and also the power of the channel to be able to dictate economic terms, which hasn’t been the situation in the past.
A channel lead is the warmest hand-off that you can possibly get in sales. I think that’s part of why we’re seeing these organizations starting channel partner programs earlier and earlier on in their business.
Right. But there are also a lot of challenges in running an effective channel program. For instance, you were just mentioning getting those channel leads. Well, one of the things that has to be managed is the channel conflict between the direct organization and the channel. Who has what responsibilities? What account responsibilities? What happens if the channel’s not getting the traction that you were hoping to get out of a particular territory? How do you get a channel partner to support all of the sales reps rather than just one or two sales reps? And so these are all things that obviously you need to have executive leadership over. You always need to have somebody who wakes up in the morning caring about whether those deals are being done by the channel or direct.
I ran sales and marketing and had responsibility for the whole number. However, I always had somebody who was responsible for that channel. To think that the person who has responsibility for the total can also be the person who has responsibility for the channel number, is just not going to work because they can always get their number with the big number, rather than working through the channel. So you need to have “deal headquarters” to make sure that everybody knows what’s going on. And you have to trust in the partners to be able to share access to your salesforce.com or whatever CRM system that you’re using, and also to have content that’s relevant to the channel and not just for yourself.
So one of the things that companies are struggling with is the fact that they barely have enough content to support their own people, much less what’s needed by the channel. At the end of the day, the channel still needs to have content. They might have relationships that get them access, but they need to have content to be able to share with their relationships to advance the value propositions that they’re trying to represent out there.
Absolutely. They’re your volunteer salespeople selling on your behalf. They need to be empowered and enabled.
How do you determine if and when a company is ready to build a channel partner program? What do you think is really the bare minimum for an organization to really start selling through and with channel partners?
You need to decide things like, what are you going to do about leads? Are you going to develop leads for your channel? A lot of companies are looking for both sides. I remember working as a channel partner for Oracle, and we were a systems integrator for their e-commerce solution, and for a while, that company lived on business given to them by Oracle. But then came the point when Oracle was expecting the partner to be bringing business to them. So there’s got to be that give and take. I would say that, if you’re going to start with just a channel, be prepared to use your marketing and inbound resources, and perhaps even some of the inside sales resources to feed the channel, not just looking for the channel to feed you.
To learn more about the channel from the point of view of the partner, conflict between direct and indirect sales, making your partners money, customer experience ownership and more, tune in to episode 28 of The Allbound Podcast.